RBS 2011 Annual Report Download - page 73

RBS Group 2011 71
Global Transaction Services (GTS) recognises the important role
international trade plays in a strong global economy and throughout 2011
the division supported UK companies, both in the UK and overseas, to do
more business internationally. This support included delivering a series
of UK Government-backed ‘Doing Business in Asia’ events.
During the year, GTS invested in improving existing products and
services and also in developing new ones. To help corporate treasurers
manage their global positions, the division launched a global Liquidity
Solutions Portal, giving its customers a view of their operational and
investment balances and rates all in one place, improving transparency,
and enabling them to execute and redeem investments effectively.
2011 compared with 2010
Operating profit was down 32%, partly reflecting the sale of Global
Merchant Services (GMS) which completed on 30 November 2010.
Adjusting for the disposal, operating profit decreased 16%, driven by an
impairment provision on a single name in 2011.
Excluding GMS, income was 7% higher driven by the success of deposit-
gathering initiatives, as deposits increased £2 billion in a competitive
environment.
Excluding GMS, expenses increased by 10%, reflecting business
improvement initiatives and investment in technology and support
infrastructure.
Impairment losses increased to £166 million compared with £9 million in
2010 reflecting a single name impairment.
For the eleven months in 2010 before completion of the disposal, GMS
generated income of £451 million, total expenses of £244 million and an
operating profit of £207 million.
2010 compared with 2009
Operating profit increased 12%, or 10% on a constant foreign exchange
basis, driven by a robust income performance (which has more than
compensated for the loss of Global Merchant Services (GMS) income),
good cost control and lower impairments. Adjusting for the disposal
operating profit increased 21%.
For the eleven months before disposal, GTS booked income of £451
million and total expenses of £244 million for GMS, generating an
operating profit of £207 million.
Income was up 3%, or 6% excluding GMS, reflecting higher deposit
volumes in the International Cash Management business, growth in the
Trade Finance business and improved Commercial Card transaction
volumes.
Expenses were broadly in line with 2009, at £1,464 million, as increased
investment in front office and support infrastructure was mitigated by tight
management of business costs.
Third party assets increased by £6.8 billion, or £7.6 billion excluding
GMS, as Yen clearing activities were brought in-house and loans and
advances increased.